Anglo loan details were kept ‘tight’, trial hears
‘Regulator is saying “I’m not looking”’
DETAILS of back-to-back loans between Anglo Irish Bank and Irish Life & Permanent were to be kept ‘tight as a duck’s a***’ – but the financial regulator would not be looking, the trial of David Drumm heard yesterday. The comments were made during phone calls involving Anglo and IL&P staff, recordings of which were played for the jury yesterday.
The former Anglo chief, Mr Drumm 51, from Skerries, is accused of false accounting and conspiracy to defraud. The charges relate to what the prosecution describes as a ‘wholly artificial’ €7.2billion transaction between Anglo and Irish Life and Permanent (IL&P), which was allegedly designed to create the illusion that Anglo was bringing in billions of euro at a time of global financial crisis.
Mr Drumm has admitted authorising the deal, but denies that he acted fraudulently or dishonestly.
In his second day in the witness box, Matt Cullen, formerly a director in Anglo’s treasury department, was taken through a number of phone calls, which had been recorded as part of the bank’s policy to track deals.
The calls initially related to a €750million deal done in March 2008, which preceded the September 2008 transactions for which Mr Drumm has been charged.
The jury heard Mr Cullen was asked during a conference call on March 25, 2008, to update other Anglo executives about the ‘Permo’ deal. During that conversation, Mr Cullen said the deal was on, and that Anglo would give money to IL&P, who would give it back as if it came from Irish Life Assurance, so it would appear to be a corporate deposit for Anglo.
John Bowe, then Anglo’s head of capital markets, is recorded as saying: ‘Only issue we got to think about is from a regulator point of view, and the regulator is more or less... saying “I’m not looking”.’
In another call on March 27, the jury heard that Mr Cullen and his counterpart in IL&P, David Gantly, discussed the details of the March transactions. Mr Bowe was also on this call. Mr Gantly told Mr Cullen: ‘You put the stuff into us and we put it straight back through our other boys.’ ‘That’s it,’ Mr Cullen replied. The court has heard that ‘the other boys’ referred to Irish Life Assurance. Mr Gantly suggested it would be better to break the €750million figure into smaller transactions because ‘it might look better to disguise it, somewhat, you know?’
He also suggested that the deal should be kept ‘as tight as a duck’s a***’. Prosecuting counsel Paul O’Higgins asked Mr Cullen what Mr Gantly might have meant by these statements.
Mr Cullen replied: ‘He was afraid it would get out into the market.’
In a phone call in September 2008, Mr Bowe told Mr Cullen that the bank’s expectations were very negative for the year-end accounts later that month, the jury heard.
Mr Cullen told Mr Bowe that he had spoken to Dave Gantly, and had told him the figure for the September interbank loans could now be higher than the previously agreed €3billion. Mr Cullen told Mr Bowe: ‘Because, as they see it, you might as well be hung for a sheep as a lamb’.
The trial resumes today.
Trial: David Drumm yesterday